1. Tax Retrenchment Now! Learning from B-EST practice James Oates Glasgow 4 th October 2014

2. Tax Efficiency Maximise revenue with minimum distortion “Pluck the goose to get the maximum amount of feathers with the minimum amount of hissing”- Colbert Debate should not be about marginal rates, but tax efficiency 2

3. Defining the problem The United Kingdom has a tax code in excess of 11,325 PAGES long It is the Longest Tax Code in the world Nominally Progressive it is actually highly Regressive It is literally impossible to understand and has been designed that way 3

4. Tax competitiveness 4

5. Tax take as % of GDP 5 Source: Eurostat

6. Cost of Tax Administration 6 UK Estonia Source: OECD

7. Time to file tax return / year 7 Source: World Bank

8. Esto-Tax System A Quick Overview

9. OK So, where again? 9

10. Flat may not be regressive 10 Flat Tax of 21% Basic Tax Free Rate= €144/month €355/month minimum wage (av. €1023) Limited exemptions to lift BTFR –Housing loan up to € 160 / month –Pensions payments up to 210/ month –Training costs –Donations –All not greater than 50% of total income 99.7% of filings made Online

11. Social tax is high Social tax rate is 33% of gross wages Min. rate which is the basis for payment of social tax is €320 /month Minimum social tax liability of employers is €105.60 (monthly rate x 33%) Minimum social tax liability of sole proprietors is €316.80 per quarter (€1267.20 per year) 1% (2%) unemployment insurance 11

12. Entrepreneurship fostered Corporation tax is 0% on undistributed profits, 21% on distributed profits Takes minutes to set up limited company and open bank accounts Expectation of entrepreneurship High PISA rankings show quality of workforce 12

13. Land Tax Collected as state level tax, but 100% of the revenue is used to fund Local Councils. The rate is set by the Local Council within the limits of 0.1- 2.5%. is levied on the value of the land only, improvements are not considered. Few exemptions- even public institutions are subject to the land value tax. Land that is the site of a church is exempt, but other land held by religious institutions is not exempt. >90% of residences within Estonia are owner occupied compared to a rate of 67.4% in the United States. 13

14. Conclusions Simple & Clear tax system Low cost of administration High use of technology (land registry) Structural rather than policy-driven goals Plenty of feathers but much less hissing 14